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MINNEAPOLIS -- Discount retailer Target Corp. here said that as part of its intensifying battle against chief rival Wal-Mart, it plans to expand its food offerings. The 1,239-unit discounter said it will incorporate larger food sections into most of its stores which, when the project is complete, will have as much as 50 percent more space for food than is now typical.
The company also said it will add a wider assortment of ready-to-eat foods in its SuperTargets, which already have expansive grocery departments, as well as more deli-style offerings like soups and salads.
Target said during a conference call with analysts that it hopes the planned hike in food merchandising will drive more shoppers into its stores.
Target discussed the new food strategy during a conference call to go over details of its fourth-quarter earnings. Target's president Gregg Steinhafel said all the company's new stores with more emphais on food will be built according to a prototype dubbed "P2004," which features a broader mix of groceries. The chain has already introduced elements of the P2004 concept into nearly half its stores. Target said it will convert up to 300 more during the next two years.
The retailer reported a 14 percent jump in fourth-quarter profits helped by strong sales during the Christmas season and increasing contribution from its credit-card division.
For the three-month period ending Jan. 28, Target's profits rose to $ 939 million, or $1.06 per share, from $ 825 million, or 91 cents, in the previous year's period.
Same-store sales rose 4.2 percent, the smallest gain this year, a sign of what analysts said was Target's slowing growth rate. As for this year, Target said it expects same store sales to rise 4 percent to 6 percent.